CO2 2 Utilization with Enhanced Oil Recovery: The New Paradigm … · 2012-12-14 · December 3, 2012. CO2 Utilization with Enhanced Oil Recovery: The New Paradigm forCO2 Capture

December 3, 2012

CO2 Utilization with Enhanced Oil Recovery: The New Paradigm forCO2 Utilization with Enhanced Oil Recovery: The New Paradigm for CO2 Capture and StorageCO2 Capture and Storage

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COCO22 Utilization with Enhanced Oil Recovery:Utilization with Enhanced Oil Recovery:The New Paradigm for COThe New Paradigm for CO22 Capture and StorageCapture and Storage

Prepared for:10th Annual Carbon Management Workshop

Prepared By:Vello A. Kuuskraa, President

[email protected] RESOURCES INTERNATIONAL, INC.

Arlington, VA USA

December 4, 2012Midland, Texas

mailto:[email protected]

December 3, 2012


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IntroductionIntroduction

To better understand the role of CO2 enhanced oil recovery (CO2 -EOR) as a major carbon management strategy, it is useful to examine four key questions:

(1) How ready are CO2 -EOR practices and technologies for large-scale CO2 utilization?

(2) To what extent can CO2 -EOR, like wind and solar, provide carbon neutral (“green”) energy?

(3) What is the “size of the prize?” and

(4) To what extent could CO2 -EOR provide a market-driven option for increased application of CO2 capture?

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1. How Ready Are CO1. How Ready Are CO22 --EOR Practices and EOR Practices and Technologies for LargeTechnologies for Large--Scale COScale CO22 Utilization?Utilization?

CO2 -based enhanced oil recovery, using state-of-the-art (SOA) technology, is already being implemented in the U.S.:

• CO2 -EOR currently provides about 284,000 barrels of oil per day.

• A total of 62 million metric tons of CO2 was used by EOR last year with 13 million metric tons from industrial sources, natural gas processing plants, and hydrocarbon conversion facilities.

• A robust network of pipelines in the Permian Basin, the Gulf Coast and the Rockies transports this CO2 to oil fields from natural CO2 deposits, industrial sources and gas processing plants.

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U.S. Oil Production from COU.S. Oil Production from CO22 --EOREORWith increased access to CO2 supplies, CO2 -EOR production

is expanding in the Gulf Coast and Rockies.

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Significant Volumes of Anthropogenic COSignificant Volumes of Anthropogenic CO22 Are Are Already Being Injected for EORAlready Being Injected for EOR

Location of Oil Fields

Location of CO2 Sources

CO2 Supply Geologic Anthropogenic

Texas, New Mexico, Oklahoma, Utah

Geologic (CO, NM) and Gas Processing, Fertilizer Plant (TX) 1,600 190

Colorado, Wyoming Gas Processing (Wyoming) - 300Mississippi Geologic (Mississippi) 930 -Michigan Gas Processing (Michigan) - 10Oklahoma Fertilizer Plant (Oklahoma) - 35

Saskatchewan Coal Gasification (North Dakota) - 150

TOTAL (Million cfd) 2,530 685

TOTAL (Million metric tons/ year) 49 13* Source: Advanced Resources International, 2012**MMcfd of CO2 can be converted to million metric tons per year by first multiplying by 365 (days per year) and then dividing by 18.9 * 103 (Mcf per metric ton)

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U.S. COU.S. CO22 --EOR Activity and InfrastructureEOR Activity and Infrastructure

LaBarge/Riley RidgeGas Plants

Val Verde Gas PlantCentury Gas Plant

Enid Fertilizer Plant

13

5

1768

6

Dakota CoalGasification Plant Antrim Gas Plant

21

3

2

Source: Advanced Resources International, Inc., based on Oil and Gas Journal, 2012 and other sources.

Number of CO2 -EOR ProjectsNatural CO2 SourceIndustrial CO2 SourceCO2 PipelineCO2 Proposed Pipeline

123

Lost Cabin Gas Plant

1

2

3

McElmo Dome

Bravo Dome

Sheep Mountain

Jackson Dome

New CO2 pipelines and gas processing plants are delivering CO2 to CO2 -EOR projects in the Gulf Coast and the Rockies.• Green Pipeline

• Greencore CO2 Pipeline

• Century Gas plant

• Lost Cabin Gas Plant

Green Pipeline

Greencore Pipeline

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COCO22 --EOR EOR –– Compelling EconomicsCompelling Economics

Source: Denbury Resources (2012)

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Permian Basin COPermian Basin CO22 --EOR Case StudyEOR Case Study

• CO2 injection into the Denver Unit of the giant Wasson (San Andres) oil field began in 1985.

• Before the start of CO2 -EOR, oil production had declined from 90,000 B/D to 40,000 B/D and was on pace to decline to below 1,000 B/D in the next 20 years.

• After the CO2 flood, oil production rebounded to 50,000 B/D.

• Today, twenty four years later, the Denver Unit still produces 30,000 B/D.

““What Does a Successful COWhat Does a Successful CO22 --EOR Project Look Like?EOR Project Look Like?””

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COCO22 --EOR Results at the Denver Unit of the EOR Results at the Denver Unit of the Wasson Oil FieldWasson Oil Field

Begin CO2 injection; departure from waterflood decline

~30,000 bopd

~700 bopd

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Oil Recovery Performance From Permian Oil Recovery Performance From Permian Basin San Andres FormationBasin San Andres Formation

10

Permian BasinTypical Oil Recovery

Denver Unit, Wasson Field*Oil Recovery

*Wasson Field: 2 Billion Barrels OOIP

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*$100/Bbl Marker PriceSource: Occidental Petroleum Corporation, May 2011

Permian Basin COPermian Basin CO22 --EOR Project EconomicsEOR Project Economics

“In the U.S., our Permian CO2 operators continue to be our most profitable business, generating the highest free cash flow (after capital) among our entire portfolio of assets.”

Stephen ChazenPresident and CEOOccidental PetroleumOctober 25, 2012

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Opportunities for Improving Opportunities for Improving COCO22 --EOR Performance and ApplicationEOR Performance and Application

Even though CO2 -EOR already makes an important contribution, significant improvements are theoretically available in its performance and wider-scale application.

Some field projects, such as the CO2 -EOR floods at Denver Wasson and Weyburn, already practice selected aspects of “next generation” technology. However, with investments in research and field demonstrations, the contribution of CO2 -EOR - - to domestic energy security, to domestic CO2 abatement, and to domestic revenues and economic well being - - could be much, much greater.

The following discussion of “next generation” CO2 enhanced oil recovery summarizes both the opportunities and positive impacts of pursuing advances in CO2 -EOR technology.

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1. Scientifically-based advances in CO2 -EOR technology,

2. Integrating CO2 capture with CO2 utilization by CO2 -EOR,

3. Application of CO2 -EOR to residual oil zones (ROZs), and

4. Deployment of CO2 -EOR in offshore oil fields.

““Next GenerationNext Generation”” COCO22 Enhanced Oil RecoveryEnhanced Oil Recovery

Use of more efficient CO2 -EOR technologies and extension of these technologies to new oil resources and settings constitutes “next generation” CO2 enhanced oil recovery:

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1. Advanced reservoir characterization (to map residual oil and reservoir heterogeneity);

2. Combination horizontal/vertical wells plus “smart” well technology (to better contact bypassed oil);

3. CO2 mobility and flow path control agents (to improve reservoir conformance);

4. Increased volumes of efficiently targeted CO2 (to improve oil recovery efficiency);

5. Near-miscible CO2 -EOR technology (to expand CO2 -EOR to additional oil reservoirs); and

6. Advanced reservoir surveillance and diagnostics technology (to “see and steer” the CO2 flood).

““Next GenerationNext Generation”” COCO22 Enhanced Oil RecoveryEnhanced Oil Recovery

Six scientifically-based advances in CO2 -EOR technology:

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Performance of COPerformance of CO22 Flood Without Advanced Flood Without Advanced Mobility and Conformance ControlMobility and Conformance Control

Without advanced mobility and conformance control, much of the injected CO2 will channel through a modest portion of the reservoir’s pore space.

Source: Modified by Advanced Resources, based on data from Wasson Denver Unit CO2 flood observation pilot (Goodyear and Jensen, 2011).

% Pore Space % Injected CO2 PV Throughput

9%

16%

75%

35

20

20

25

Not Contacted

0% 100%(1 HCPV of CO2 )

3.0

0.8

0.4

0

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““Poster ChildPoster Child”” for Integrating COfor Integrating CO22 --EOR and COEOR and CO22 StorageStorage

Regina

Weyburn

CO2Beulah

North Dakota

Saskatchewan

Montana

ManitobaCanada

USA

Canada

USA

Source: EnCana, 2005

• Largest CO2 EOR project in Canada:

– OOIP 1.4 Bbbls

– 200 MMB incremental oil from CO2 -EOR

• World’s largest geological CO2 storage project:

– 2.4 MMt/year (current)

– 24 MMt to date

• A 200 mile CO2 pipeline connects the Coal Gasification Plant at Beulah, ND with the Weyburn oil field in Canada.

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Permian Basin ROZ Below Existing Oil FieldsPermian Basin ROZ Below Existing Oil Fields

Oil Saturation Profile in the TZ/ROZ (Wasson Denver Unit Well Log)

Main Pay Zone (MPZ)

Transition Zone (TZ)

Residual Oil Zone (ROZ)

Base of Ultimate OWC

Base of Producing OWC

4900

4950

4800

4850

5000

5050

5400

5350

5300

5250

5200

5150

5100

5450

OWC

100 0Oil Saturation %

*Produced by nature. **Approximately 0.3 billion barrels already produced/proven to date.***Numerous ROZ projects underway.

Main Pay Zone TZ/ROZ

OOIP 2.4 3.0

P/S Recovery 1.1 1.5*

“Stranded” 1.3 1.5

EOR Potential 0.5** 0.5***

Project AcresCO2

Injection Patterns

Oil Production (B/D)

2010 2012

Phase 1 500 10 1,200 1,200

Phase 2 480 9 1,700 1,800

Stage 1 2,320 29 1,000 3,500

(Three Hess Oil operated miscible CO2 floods in the ROZ interval show successful oil response.)

Seminole Unit (San Andres) ROZ Project

Wasson Denver Unit Oil Resources (Billion Barrels)

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Permian Basin Outline

TXNM Palo Duro Basin

Theorized U. Permian Hydrodynamic Fairways

Northwest Shelf Area

Central Basin Platform

Matador Arch

Midland Basin

ReefAbo

TrendBoundary of

Northwest Shelf San Andres Platform Carbonate Play

Source: Modified from Melzer Consulting (2010)

Permian Basin ROZ Permian Basin ROZ ““FairwaysFairways””

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ARI and Melzer estimate that up to 100 million barrels of OIP exist in the ROZ “Fairways” of the Permian Basin.

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Deployment of CODeployment of CO22 --EOR in Offshore Oil FieldsEOR in Offshore Oil Fields

In 2005, Advanced Resources took a “first look” at the CO2 -EOR potential of oil fields located in the shallow-water shelf of offshore Louisiana. Since then, a number of efforts have been undertaken to bring offshore CO2 - EOR closer to reality:

• In mid-2012, Scotland established CENSOR- CO2 - - Center for North Sea Enhanced Oil Recovery with CO2 - - to “unlock 3 billion barrels of oil from the North Sea.”

• In a recent SPE paper, Shell discusses efforts “to implement new generation CO2 projects, including offshore application.”

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2. To What Extent Can CO2. To What Extent Can CO22 --EOR EOR Provide Carbon Neutral Energy?Provide Carbon Neutral Energy?

At 1 metric ton of CO2 injected per 2.5 barrels of oil recovered, the carbon balance of CO2 -EOR is close to neutral, when using otherwise vented CO2 .

With a gravity stable process, CO2 -EOR can store more CO2 than the carbon content of the oil (“green oil”).

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Opposition to Storing COOpposition to Storing CO22 with with EOR Seems MisplacedEOR Seems Misplaced

A number of activities besides CO2 -EOR bring additional oil to the surface, including exploration and drilling for conventional oil.

Except in environmentally fragile areas, no public official concerned with energy security and economic well-being has called for a stop to conventional oil exploration or production.

Norway’s Statoil announced a goal of 60% recovery from its offshore oilfields. This announcement was meet with praise not protest.

CO2 -EOR is much more carbon-neutral than conventional oil exploration or Norway’s actions on conservation of its oil resources.

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Original Oil InOriginal Oil In--Place: 600 B BarrelsPlace: 600 B Barrels ““StrandedStranded”” Oil InOil In--Place: 396 B BarrelsPlace: 396 B Barrels

Proved Reserves 22 Billion Barrels

Target for EOR396 Billion Barrels

Cumulative Production 182 Billion Barrels

Source: Advanced Resources Int’l. (2011); Melzer Consulting (2012)

400 BILLION BARRELS OF OIL IN MAIN PAY ZONES.

140 BILLION BARRELS OF OIL IN RESIDUAL OIL ZONES (ROZs).

Oil InOil In--Place: 140 B Barrels*Place: 140 B Barrels*

100 Billion Barrels

Below Oil Fields

ROZ “Fairways”

40 Billion Barrels

3. What is the 3. What is the ““Size of the Prize?Size of the Prize?””

*Within ROZ “Fairways” of the Permian Basin and below oil fields in 3 U.S. basins

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Large volumes of oil remain “stranded” in U.S. reservoirs after traditional recovery.

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Oil Recovery and COOil Recovery and CO22 Demand/Storage:Demand/Storage: ““Next GenerationNext Generation”” COCO22 --EOR TechnologyEOR Technology

Two publically available reports, prepared by Advanced Resources Int’l and Melzer Consulting for U.S. DOE/NETL, provide the analytical foundation for the estimates of oil production and CO2 demand by the CO2 - EOR industry.

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• In the U.S., the “size of the oil prize” for “next generation” CO2 -EOR technology is 100 billion barrels of economically recoverable oil,* nearly four times larger than from today’s “state of the art” CO2 -EOR technology and practices.

• The economic demand for CO2 from “next generation” CO2 - EOR is 33 billion metric tons. Subtracting 3 billion metric tons of natural CO2 , the “size of the CO2 utilization and storage prize” in the U.S. is 30 billion metric tons.

• This is equal to 35 years of CO2 emissions captured from 140 GWs of coal-fired power.

The Size of the PrizeThe Size of the Prize

*Using an oil price of $85 per barrel,* a CO2 price of $40 per metric ton, and a return on investment hurdle of 20%.All economic value numbers are expressed in U.S. dollars.

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Impact of Applying Impact of Applying ““Next GenerationNext Generation”” vs. SOA vs. SOA COCO22 --EOR Technology to U.S. Oil Fields and ROZEOR Technology to U.S. Oil Fields and ROZ

25

Resource AreaEconomic Oil

Recovery (BBbls)*Demand for CO2

(Billion Metric Tons)

SOA Next Gen. SOA Next Gen.More efficient recovery, “Lower 48” oil fields 24 60 7 17

Alaska/Offshore 3 7 1 3Residual Oil Zone (below oil fields) - 13 - 5

Residual Oil Zone “Fairways” (preliminary) - 20 - 8

Total 27 100 8 33*At $85 per barrel and $40 per metric ton, CO2 market price with 20 % rate of return (before tax). Source: Advanced Resources International, Inc. (2011)

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4. To What Extent Could CO4. To What Extent Could CO22 --EOR Provide EOR Provide A MarketA Market--Driven Option for CODriven Option for CO22 Capture?Capture?

“Next generation” CO2 -EOR technology would generate gross domestic production (GDP) of $8.5 trillion, over the next thirty to forty years.

As part of this, the U.S. CO2 -EOR industry could provide:

• Revenues of $1.3 trillion for CO2 , with 90% for CO2 capture.

• About $2.1 trillion of severance and income taxes.

• About $2.3 trillion of demand for services and materials.

Over 30 billion metric tons of anthropogenic CO2 , otherwise vented to atmosphere, would be permanently stored.

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The The ““Value ChainValue Chain”” of of ““Next GenerationNext Generation”” COCO22 --EOREOR

Revenue Recipient Value Chain FunctionRevenuesPer Barrel

($)

TOTAL* ($ billion)

Power/Industrial Companies Sale of CO2 $13.20 $1,320**

Federal/State Treasuries Severance/Income Taxes $21.30 $2,130

U.S. Economy Services, Materials and Sales $23.00 $2,300

Other Private Mineral Rights $7.70 $770

Oil Industry Return of/on Capital $19.80 $1,980

Total $85.00 $8,500 *Assuming 100 billion barrels of economically feasible oil recovery; oil prices of $85 per barrel and CO2 sales price of $40/metric tons.**Of the 33 billion metric ton, $1,320 billion overall market for CO2 , anthropogenic CO2 captured from power and other industrial plants would be 30 billion metric tons and $1,200 billion. Source: Advanced Resources International, Inc. (2011)

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Distribution of Economic Value ofDistribution of Economic Value of Oil Production from COOil Production from CO22 --EOR EOR

Notes: (1.) Assumes $85 per barrel of oil; (2.) Royalties are 17.5%; 1 of 6 barrels produced are from federal and state lands; (3.) Production and ad valorem taxes of 5%, from FRS data; (4.) CO2 market price of $40/tonne, including transport; 0.33 tonnes of purchased CO2 per barrel of oil; CCS meets 90% of CO2 demand; (5.) CO2 recycle cost of $10/tonne; 0.6 tonnes of recycled CO2 per barrel of oil; (6.) O&M/G&A costs from ARI CO2 - EOR cost models; (7.) CAPEX from ARI CO2 -EOR cost models; (8.) Combined Federal and state income taxes of 35%, from FRS data.

NotesEOR

IndustryFederal/

StatePower

Plant/Other Private

Royalties U.S. Economy1 Domestic Oil Price ($/B) $85.002 Less: Royalties ($14.90) $2.50 $12.403 Production Taxes ($3.50) $4.10 ($0.60)4 CO2 Purchase Costs ($13.20) $13.205 CO2 Recycle Costs ($6.00) $6.006 O&M/G&A Costs ($10.00) $10.007 CAPEX ($7.00) $7.00

Total Costs ($54.60) -Net Cash Margin $30.40 $6.60 $13.20 $11.80 $23.00

8 Income Taxes ($10.60) $14.70 - ($4.10) -Net Income ($/B) $19.80 $21.30 $13.20 $7.70 $23.00

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• 582 MW fueled by Mississippi Lignite• Will Capture 65% of CO2• Negotiating agreement to sell 1.1 to 1.5 million tons

of CO2 per year for EOR (170-225 MMcfd)• Project expected to cost $2.4 B and be operational

by 2014.

*Source: Mississippi Power, Denbury Resources

Southern Company’s Kemper County IGCC Plant

Advanced Power Plants Plan to Use EOR for COAdvanced Power Plants Plan to Use EOR for CO22 StorageStorage

Source: Siemens Energy

• 400 MW IGCC with 90% capture • Located near Odessa in Permian Basin• Sell 2.5 million tons of CO2 per year to EOR market • Expected cost $1.75 B; $350 MM award under

CCPI Round 3.

Summit’s Texas Clean Energy IGCC Project

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Summary ObservationsSummary Observations

“Next generation” CO2 enhanced oil recovery deserves to be a major part of a worldwide carbon management strategy:

• CO2 enhanced oil recovery is a viable, growing enterprise,

• The oil produced is low carbon energy,

• The “size of the prize” is large, and

• CO2 -EOR can provide a market-driven option for accelerating CO2 capture.

Acknowledgements. This study was sponsored by the U.S. Department of Energy, National Energy Technology Laboratory, under Contract No. DE-FE0004001.

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AdvancedResources

Internationalwww.adv-res.com

Office LocationsWashington, DC4501 Fairfax Drive, Suite 910Arlington, VA 22203Phone: (703) 528-8420Fax: (703) 528-0439

Houston, Texas11490 Westheimer, Suite 520Houston, TX 77042Phone: (281) 558-6569Fax: (281) 558-9202

Documents

CO2 2 Utilization with Enhanced Oil Recovery: The New Paradigm … · 2012-12-14 · December 3, 2012. CO2 Utilization with Enhanced Oil Recovery: The New Paradigm forCO2 Capture